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. Last Updated: 07/27/2016

Ivanov Gets Industry Oversight Role

APSergei Ivanov
As first deputy prime minister, Sergei Ivanov will oversee industrial policy and the development of civil and defense industries, telecoms and transportation, a top Cabinet official said.

Deputy Prime Minister Sergei Naryshkin, who was promoted Thursday at the same time as Ivanov, made the statement late Sunday on Rossia state television in the first indication of Ivanov's exact responsibilities.

Naryshkin, a Rosneft board member, will handle foreign economic relations and state property management.

In supervising industrial policy, Ivanov, whose promotion was widely seen as bolstering his chances of becoming President Vladimir Putin's successor in 2008, will formally overlap with another possible successor, First Deputy Prime Minister Dmitry Medvedev. Medvedev is also the chairman of Gazprom.

A comprehensive industrial policy should include the government's energy strategy, said Kirill Tremasov, chief analyst at the Bank of Moscow. "It is impossible to conduct energy policy without Gazprom, but Gazprom is Medvedev's turf," Tremasov said.

In reality, Ivanov will not have a say over Gazprom, analysts said. "As a result, everything will be confined to symbolic orders" to the company, Tremasov said.

"They will not be allowed rivalry, especially in issues that are important," said Natalya Volchkova, senior economist at the Center for Economic and Financial Research, a think tank.

Ivanov will be busy with diversifying the economy, rather than meddling with Gazprom, Volchkova said. Most likely, he will call for greater state investment into the high-tech defense industry in the hope that this will spur the development of related civil contractors, she said. But such a strategy is unlikely to be successful, she added.

Ivanov could also push for the country to refine more oil domestically to export more value-added products, rather than crude, she said. But he is unlikely to offer more incentives for international high-tech corporations such as Boeing and IBM to use Russian intellectual resources, which would be one of the best ways to pursue economic diversification, she said.

Ivanov's promotion means that he will control a greater share of government spending. As well as overseeing the spending of more than $20 billion in the defense and aerospace industries this year, he will oversee billions of dollars more in spending in the other sectors under his oversight.

The budget for Medvedev's national projects will total $9.5 billion this year.

With influence over telecoms, Ivanov will decide on the plans to privatize Svyazinvest that have long been delayed over concerns that it could harm military communications.

Naryshkin, a government nominee to Rosneft's board, could clash with Gazprom in his role of overseeing the auctions of assets of Yukos later this year, as both Gazprom and Rosneft are eyeing the bankrupt oil firm's Arcticgaz, Tomskneft and Samaraneftegaz units.

The other government nominee to Rosneft's board is chairman Igor Sechin, who is also Kremlin deputy chief of staff.

Naryshkin will also likely keep an eye on Gazprom over its trade with the former Soviet republics, as this area will now be part of his foreign trade responsibilities.

Gazprom has uneasy relations with Ukraine and Belarus over pricing disputes, which led to shutoffs of gas and oil respectively. But Volchkova said she doubted Naryshkin would be able to influence Gazprom's policies in this area.